North Carolina agrees to increase reimbursement rates for rural hospitals

North Carolina Treasurer Dale Folwell and the State Health Plan said on March 13 that they have agreed to pay rural hospitals an additional $52 million under a controversial project that will change how providers are reimbursed.

The Clear Pricing Project will shift the state's health plan, which covers more than 720,000 employees, from a commercial-based payment model to a reference-based government pricing model that reimburses providers based on a percentage above what Medicare pays.

Rather than negotiating rates in private, Blue Cross Blue Shield of North Carolina, the plan's administrator, will pay set amounts for services. Effective Jan. 1, 2020, healthcare providers that treat State Health Plan members will be paid at Medicare rates plus an average of 82 percent, according to a news release.

The release states that new adjustments will result in a 20 percent increase in payments to rural providers compared to the original proposal.

"Our approach has always been to help rural hospitals be in a position to provide vital health services in outlying communities. However, the problems with rural hospitals' finances existed long before I became state treasurer," said Mr. Folwell. "Our original CPP-payment models provided substantial support for hospitals in rural communities. After many meetings with healthcare providers across the state, the team at the State Health Plan was able to expand the number of rural facilities included in the initiative, allowing increased reimbursement rates that further support their profitability and independence."

Mr. Folwell estimates the plan will save taxpayers about $258 million and State Health Plan members about $57 million. But hospitals and providers have resisted the plan, arguing the change could cause a domino effect with insurance companies pushing for locked-in rates as well. North Carolina lawmakers are also fighting the reimbursement cuts.

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